Smaller SVoD players need to partner up or be acquired in order to compete with the big players according to Moody’s analyst Neil Begley.
Speaking at the Goldman Sachs media conference, Begley said the SVoD world is splitting into two tiers, with smaller players needing to “partner up in some fashion or be acquired … to achieve the girth necessary.”
If not, “they’ll be relegated, and that might be fine, to being a Tier 2 provider. But churn will be high and it will be hard to get the attention of folks as an SVoD platform on a standalone basis without having consistently superior content that attracts people in their own right,” added Begley.
He told the audience the future of television distribution is direct to consumer SVoD and AVoD, “and more of the money that has traditionally been spent in linear television needs to be gradually moved into this space. And it’s all about scale. Scale to attract the talent and to achieve the lowest cost per viewing hour, with the goal of being what we would refer to as a Tier 1 platform.”
According to Begley, Netflix is a Tier 1 platform, while Disney Plus has “all the makings and the markings,” and HBO Max appears to be there “but I think they’ve an error in their pricing that could stall their growth.”
“So what that means is that everybody else is either way too small in terms of how much they spend on content and they’re still heavily reliant on the linear programming,” he said.